Not all are participating in today's market mini "rally", a good portion of small specialty retailers are getting knocked around pretty good.
Chico's FAS (CHS) was down nearly 38% after reporting worse than expected third quarter earnings. Revenue of $499.8 million missed consensus estimates by about $16 million, while earnings per share of 5 cents were well below the 8 cent consensus. Same store sales, which were expected to drop 2.1%, actually fell 6.8%. Not a pretty quarter for sure.
The damage to CHS is severe. It has not traded at these levels since early 2009, a time that many of us recall not so fondly. Currently yielding 4.6%, the company still has ample liquidity, ending the quarter with $229 million or about $1.87 per share in cash and short-term investments, and $61 million in debt. I'm not tempted, however; a bit burned out on down and out retail.
Jewelers are also having a difficult day, but not nearly as bad as CHS. Tiffany & Co (TIF) was down 11% after also reporting third quarter earnings. While earnings per share of 77 cents narrowly exceeded the 76 cent consensus, revenue of $1.01 billion missed the consensus by $40 million. The market seems none too pleased that same-store-sales (+3%) were well below expectations (+5.4%).
Meanwhile, Signet Jewelers (SIG) was off about 5%, likely in sympathy with TIF. Watch name Movado (MOV) was down about 3%, but has staged a nice recovery after being off as much as 7% earlier, while Fossil (FOSL) is down about 5%. The latter was a huge winner for me in 2018, but I chose to exit after a much bigger than expected run-up; a phenomenon that this value investor is not used to.
The retail saga continues, the ultimate roller coaster where much money has been made, and lost in the past couple of years. Can't wait for fourth quarter results!
